If Apple iWatch Sounds Like a Gold Mine, Think Again

Smartwatches are already available on the market, and grand visions and brand names haven't sent them flying off the shelves.

While rumors of an Apple (NASDAQ:AAPL) iWatch abound, it's difficult to separate the real from the speculative. As of now, the patents are real, but any price points, release dates, and hardware specs are largely educated guess work.

If there is one absolute certainty amid all this confusion, it's that the wait for a modern smartwatch isn't just beginning; in fact, it has been over for a while.

Sony's (NYSE:SNE) SmartWatch made its US debut April 12, 2012, selling for $149.99. By enabling users to view Facebook (NASDAQ:FB) updates, tweets, calendar notifications, emails, and SMS message, Sony's product seems to cover a lot of the bases that users would expect to see covered by an iWatch.

Prior to the June 25 confirmation of a revamped SmartWatch 2 set to launch in the UK on July 15, ABI Research estimated that 1.2 million smartwatches would be sold globally in 2013, resulting in $370 million in sales.

Ultimately, the SmartWatch's poor functionality hurt sales, but ABI's projections are still telling.

The SmartWatch runs the Android (NASDAQ:GOOG) OS and is compatible with most Android devices. With over 900 million Android users globally, Sony's wrist-wear, even if it makes up a majority of the 1.2 million smartwatch sales in total, would be a niche product at best.

The SmartWatch 2 could change all that, but right now, the numbers aren't convincing.

"I think at the moment, we can all see the viability and potential for a smartwatch. It makes senses, and linking it to our smartphones could be useful. However, currently, it lacks that real strong case study which makes consumers think, 'I need that product,'" Josh Flood, a UK-based senior analyst at ABI Research, tells Minyanville.

While a big name like Sony provides an easily recognizable example, fundraising sites like Kickstarter and Indiegogo can launch the products of much smaller companies into the spotlight -- and they have.

First introduced on Kickstarter, Pebble offers various message, email, weather, and calendar alerts and can also serve as a range finder on the golf course or as a running or biking tracker. Thanks to its developer-friendly hardware, additional apps are expected, which will add to the numerous features already available. Pebble began retailing exclusively in Best Buy (NYSE:BBY) stores on Sunday for $149.99.

Having raised $10.2 million from 68,929 backers via Kickstarter, Pebble is making waves. In the end, however, the new watch retails for the same price as Sony's SmartWatch. Pebble may feature better functionality, but notifications, music control, and exercise tracking make its essential offerings pretty similar to Sony's devices, excluding the iOS functionality.

I may not be the most creative thinker when it comes to tech and design possibilities, but it's hard to see how any one smartwatch can so significantly differentiate itself from the crowd as far as features are concerned.

With the glut of smartphones available in the market today, Apple still stands out despite the numerous products that sport similar offerings. The once-bitten Apple phenomenon and its compatibility with other Apple products could be enough for the iWatch to take off, says Flood.

Another struggle for the smartwatch industry on the whole is the nature of the accessory itself. Beyond telling time, a watch makes a statement. A Rolex says -- or at least implies -- something entirely different about its wearer than a Timex does.

Both Sony and Pebble offer a variety of colored bands and sleek touch interfaces, but the first impression they give off is that of a piece of new-age technology rather than a fashion statement, which might be intentional.

Apple hasn't hesitated to slap a high price tag on its products before, but even if it made an iWatch that works, looks, and feels better than its competitors' devices, it's hard to envision smartwatches taking over the wrist real estate currently occupied by Cartiers and Audemars.

The traditional watch market is set to generate more than $60 billion in sales in 2013, according to Bloomberg. Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry, which includes some of the world's most luxurious watchmakers, said that Swiss watch exports exceeded $20 billion in 2012. While a regular watch simply tells time, it's hard to tell if the additional features offered by an iWatch could convince people to swap out their expensive timepieces.

"I think as more established technology giants bring their product propositions to the table -- Apple, Samsung, Google, Microsoft -- we are going to see the full extent of what this product can offer us," said Flood.

With the iWatch yet to officially exist, it's hard to deem it a success or failure, but the road to mass smartwatch sales could be an elusive one.